In a significant step towards refining subsidy distribution, the recently launched national Central Database Hub (Padu) is receiving positive reviews from analysts who see it as a move in the right direction.

While analysts acknowledge Padu’s potential for fairer subsidy allocation, concerns have been raised about the system’s self-updating feature, particularly its potential complexity for senior citizens and those residing in rural areas, according to TA Research.

The research house suggests that the government should undertake an extensive education campaign to familiarize the public with Padu, ensuring the success of the subsidy-rationalization plan. A three-month period until March 31, 2024, has been provided for individuals to update and verify their information on the database. Although not compulsory, the government encourages participation to benefit from targeted subsidies.

Padu’s implementation signals a shift towards a more focused subsidy distribution, intending to move away from general income categories like B40, M40, or T20, which may not offer an accurate depiction of household disposable income.

However, TA Research highlights a potential drawback, emphasizing that those who fail to register risk exclusion from targeted subsidies. The government plans to utilize existing and updated information in Padu to determine household profiles and eligibility for specific subsidies.

Regarding data reliability, TA Research expresses confidence in the system, managed by the Statistics Department. It anticipates thorough cross-checking and verification by related government agencies. Currently covering 270 types of federal government data, Padu is expected to gradually incorporate information from state and local governments in the second phase, likely between April and June 2024.

This strategic implementation aligns with the subsidy rationalization plan set for the second half of 2024. Targeted subsidies are poised to play a pivotal role in the government’s fiscal strategy, aiming to reduce the fiscal deficit to 3%-3.5% of the gross domestic product by 2025.

With a substantial allocation of RM52.8 billion for subsidies in the current year, a 17.9% decrease from the estimated RM64.2 billion in 2023 is anticipated due to the phased introduction of subsidy rationalization, as per TA Research’s projections.